Higher pension outgo: EPFO planning to move apex court
The Employees Provident Fund Organisation (EPFO) is planning to challenge a High Court order that permits workers to draw pension on a wage above the current cap of Rs 15,000, as per a report in Mint.
"We are readying for a review petition. Pension contribution by EPFO subscribers is based on a Rs 15,000 salary ceiling. If pension outgo is calculated on the total salary above the Rs 15,000 threshold, it will be tough to maintain. It will be a negative cash flow and we may fall short of several thousand crores every year," a source told the paper.
Organised sector employees pay 12 percent of their basic salary as contribution towards EPF, and an equal amount is paid by the employer.
Moneycontrol could not independently verify the news.
There are a few reasons stopping the EPFO from making higher pension payouts, the report said.
First, there is no rule that allows collection of higher pension contributions.
Second, low contribution by an individual makes them ineligible for a higher pension payout.
Third, the retirement fund manager does not have an accounting stem system in place to calculate the differential pension contributions.